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A former US air force master sergeant who nicknamed himself “Al Capone” has pleaded guilty to defrauding the military branch out of $37m by inflating the cost of IT contracts – and giving some of the extra money to an individual he called “Godfather”.

Alan Hayward James, from Texas, ran a nine-year scam, beginning in April 2016, which also saw him funnel excess funds to himself, his family and his co-conspirators.

James, 51, pleaded guilty on Wednesday to conspiracy to commit wire fraud, bribery and conspiracy to rig bids for the US Pacific air forces based in Hawaii. In a plea agreement, James admitted conspiring with multiple competitors to rig bids for IT contracts with the US defense department

He “knowingly conspired” with co-conspirators and companies in a manner which “falsely inflated” the value of contracts, the justice department said. James encouraged some companies to overbid and others to underbid for services. In one instance, he told a company to submit a bid for an IT contract that was “low and stupid”, which effectively led to a co-conspirator company winning the contract at an inflated rate.

“Through this bid-rigging scheme, the defendant not only stole from American taxpayers and harmed companies seeking to compete honestly for government contracts, he also ultimately harmed essential military services designed to keep our nation safe by diverting resources away from other services,” said the US attorney for Hawaii, Ken Sorenson.

“Bid-rigging and anti-competitive behavior in government contracts erodes trust in our institutions, harms taxpayers, and will not be tolerated. We will continue to investigate and prosecute any and all who would seek to manipulate markets and undermine fair competition for their own personal gain.”

Money from the scheme was distributed through shell companies and through the payment of false salaries, including to family members of co-conspirators. A ledger obtained by the justice department showed payments made to one individual referred to as “Godfather”, calling to mind the fictional mob movie series. Others were made to his parents, whom he referred to in the ledgers as “Capone M” and “Capone D” while he named himself after the infamous real-life mobster synonymous with that surname.

In one case, James used government funds “to pay for an all-expenses-paid multi-day stay at a luxury resort” for his co-conspirators on the Hawaiian island of Oahu. “As part of their stay at the resort, co-conspirator individuals took part in golf outings, horseback rides and received massages,” the justice department said.

James agreed to pay a restitution of at least $1,451,656.80 to the defense department, prosecutors said. He could face up to 45 years in prison, though defendants who opt to plead guilty prior to going to trial generally do not face the maximum punishment possible.